Top 10 Crypto Currencies: As a Long Term Investment – Number 4-2
Important Disclaimer MUST READ : This list does not constitute investment advice, it is for illustrative purposes only, you should always do your own research and apply critical thinking considering all the facts when investing. Only risk what your are willing to lose. This informative list is written at one point in time. Facts can change at any given moment that could constitute the assumptions in this list void at any time in the future. Black swan moments can occur and investing in crypto currencies is still a very speculative endeavour.Crypto markets can experience large percentage swings either up or down at any given moment. Investing in any of these crypto currencies could result in singnificant loses or significant gains.
Investing in crypto currencies can mean being your own custodian of funds so it is your responsibility to secure these safely. You can also rely on third party custodians to hold your assets so due diligence and a full understanding of this risk needs to be considered.
Seek professional investment advice where possible and always ask your investment advisor whether he is personally invested in the products he is recommending. Ask your advisor for proof he is personally invested in the products he recommends and seek additional verfication when necessary. Ensure the advisor informs you if his own personal investments change from any moment in the future that differs from what he advised you of.
There is no Long term because “In the long run we are all dead” as said by John Maynard Keynes, but here we are assuming 1-2 years here and we all hope to be live longer than that.
The authour of this material is likely to be invested in any or all of the coins mentioned here but this can change at any given moment as the facts and assumptions change. This reflects a view at one point in time, when publishing was made. Things can change quickly in the crypto world so a good investment one minute can turn out to be a bad one the next. The author accepts no liability whatsoever for any personal investment made by anyone based on any view published here.
Basic Assumptions of this thesis: The internet will continue to exist in its current open form with free access to all which allows anyone to run their own software on their own computer that can freely connect to the internet and communicate with other users. Any change of this current form of free internet could severely damage access to sharing and transferring value of any of cryptographically secured coins. The whole thesis is completely dependent and relies on this free form of internet. Any change to this model on how access is permissioned could seriously harm any crypto coin community and the underlying value of the associated coins.
The coins on this list will also focus on those with more of limited supply as some other coins appear to be more infinetly inflationary, or opaque. Some coins and their associated technology could be great platforms solving real world problems, that could well explode in popularity, but it’s the attached value mechanism we are more interested in. The coin should be designed and established in it’s current code base to be more stable and relatively less inflationary. This allows the underlying functionality and technology of the platform to be the focus. Some great platforms can allow for inflating the attached crypto currency coin during periods of volatility which means the long term value proposition as an investment is inherently more risky. These type of platforms and attached coins will not necessarily be included as a focus in this series of articles.
Of course any investment success also depends on the entry price and exit price and theoretical gains are an illusion until you sell out or cash in. A prudent investment strategy always uses gains to diversify further a portfolio.
- Never invest what you can’t afford to lose.
- The amount you invest should very much depend on how much you will not need for the essential bare necessities of your life.
- It is possible to take more risks with a few 1,000 dollars than you can with a few million.
- Always have enough money to pay your expenses and fund your desired level of lifestyle.
- Don’t take on high interest debt to fund risky illiquid investments unless it makes absolute sense.
- Leverage can be a great way to increase potential returns but can also more likely lead to ruin and the piling up of more debt.
- Never forget debt is power and those that you owe will always be able to use that debt to their advantage.
- Be careful with complex financial products that entail contracts as invariably there will be small print you haven’t read that will mean really big gains can be reduced by the contracting party and they will always try to recoup big losses if things don’t go in your favour.
- Set clear investment objectives in terms of timeframe and desirable profits or acceptable loses and stick to them.
- Don’t deviate from your plan or strategy and remove emotion from any trading and investing.
- Don’t get emotionally attached to an investment and exit if things start going wrong especially if the original fundamentals that convinced you to invest change considerably.
For a full list of the potential upside in certain coins compared to the popularity and network of Bitcoin as a baseline, then please check out the Cryptindexes.com fundamental index.Top 10 Crypto Currencies: As a Long Term Investment
Potential Upside: 100’s %
Justification: A Bitcoin Fork with scalable features already built in and a very well funded development team with credible vision and dedication.
DASH (previously DarkCoin) is a relatively old player in the crypto currency community and unlike many other bitcoin clones it refuses to go away. Indeed DASH is becoming everything Bitcoin should have become but faster and seemingly keeps on getting better while bitcoin stays stagnant. It was originally a fairly simple fork of bitcoin with an interesting additional feature of sending transactions more privately. Since then however it has evolved quite considerably and the most recent and forthcoming updates show it is becoming everything Bitcoin can’t be. It is currently more scalable than Bitcoin with bigger block sizes than Bitcoin and has a reward and governance model in place that incentivises DASH holders to lock up their funds and confirm transactions. Dash has more Nodes than Bitcoin thanks to its Masternode program that essentially provides interest for locking up your funds and hosting a node. The funds to finance this interest comes from a splitting of the miners rewards (in bitcoin miners get 100%) with masternodes and the dash decentralised organisation. This gives a funding model to the chief developers of DASH thus incentivising them to build and improve the network even further. The recent iterations of DASH released in 2017 seem very impressive and some of the features could be the ‘killer app’ that enable crypto currencies to be accessible to the mainstream. Any Bitcoin fan that complains about block size, hard forks, scalability etc just needs to check out DASH and be happy that there already is a Bitcoin fork that serves their needs.
The very well funded incentive model also gives the MasterNode operators and therefore chief developers a very big platform to promote and market DASH. This is crucial in increasing awareness and if it really becomes a tool that any layman can use, then under the right conditions, DASH will head to the moon in the outer solar system.
Risks / Headwinds:
DASH is not without its headwinds and the biggest risk we see is the complexity and speed at which they are making updates to the system. As we have seen with hard forks not going to plan, this can split the community and the execution of any software upgrades needs to be executed flawlessly with all bugs being worked out. Indeed the recent 12.1 release has revealed several bugs already. The other major headwind is that DASH essentially has a CEO and figure head with a well funded team which means they are corruptible. This is despite the voting mechanism of the decentralised organisation in place where masternodes vote on funding proposals. This just means there is more a of a sense of centralisation at the top than may be promoted. The big potential risk to any investment this causes is its conflict with one of the major objectives of DASH, which is seeking to fill the need of Digital Cash in the crypto currency space.
One aspect of cash is that consumers and merchants require a stable currency to transact in. So with fiat currency not going away anytime soon, DASH would need a stable price against fiat currency in order to become really widespread. One of the only ways to achieve stable prices with increasing demand (and therefore price) is to increase the supply of tokens. With DASH being relatively more centralised at the top, and hard forks easier to come by, this is not an impossible feature to be added to ensure more stable prices for vendors. This is especially an issue as software upgrades to the DASH network just became a lot easier with the release of 12.1 and it seems a hard fork is not even necessary any more. This is not one of the new features the DASH Development team are singing from the rooftops but could make DASH even more corruptible. A considerable amount of DASH is help up in Masternodes and a bad actor would just have to infiltrate this network to corrupt DASH. This is only a theoretical threat for now but one potential weakness for sure. Read more on the potential DASH backdoor here.
That said the lead developers and team in control of the network will no doubt have many native tokens themselves locked away so are strongly incentivised to get the price up substantially before they start even considering altering the limited supply model currently in place. Indeed Dash is said to have had an enormous pre mine buy its developers before the official launch. However this does give some assurance that the price would move substantially higher before any inflation increase and subsequent devaluation of existing tokens.
Potential Upside: 1000’s %
Justification: Maidsafe has been ten years in the making and is trying to incorporate a native token similar to Bitcoin into the entire data structure of something like the internet.
MaidSafe could be everything Bitcoin could ultimately become but MaidSafe is almost upon us and is a way down the development road. Imagine a complete decentralised internet with all data being secure and potentially un-copyable or unique with a native token of value attached. This can be truly transformative to the prosperity of the world and remove the power and control of money from the few and more into the hands of everyone. MaidSafe has the potential to redistribute wealth more evenly around the world and provide an open playing field with low barriers for anyone with an idea and the determination to make it work. The potential of having value and native token attached to all data within an internet like environment has the potential for people to take back control of their data and make it costly for spam, DOS or brute force attacks on a network. This potentially makes it even more secure. In theory any application could then be built upon this new flexible protocol making it truly transformative.
MAID SAFE PHONE?
Maidsafe is essentially leading towards becoming a full operating system, with a distributed storage model that could also ultimately upset the current centralised server model. Therefore there is no reason why Maidsafe could not develop into being an application on a phone or even an OS for a phone itself. There is a big gap in the market for a safe and private mobile phone OS that could be more secure against snooping and this is one direction it can ultimately lead. For now it tends to be more of an application for current desktop computers that would allow an entire more distributed internet that distributes rewards. These rewards are given to those for being constantly connected to the network and providing spare storage capacity for the system to function. This would allow almost anyone to set up a server farm securely and earn rewards for doing so. Starting your own data centre currently is not straightforward as there are so many security issues and technical challenges to running one effectively. That said the rewards for ‘Farming’ are not likely to result in any significant instant return on investment.
Risks / Headwinds:
MaidSafe’s main headwind is the complexity in the system which has the potential to trip on itself and require lots of testing and bug fixing before it is ready for widespread adoption. As we have seen with more complex systems in the crypto space, even after a few years of live testing, the network could still be subject to attacks with weaknesses exposed. This can severely undermine any new or more mature network as trust and faith in the software and protocol is key to any serious momentum.
The other cautious note for now is that the tokens and network are still not live and only SAFE tokens have been distributed as part of an initial crowd raising and ICO. These tokens are only available through exchanges. There is no native wallet to store your SAFE tokens as yet. There are other online wallets that can hold your SAFE coins but this just adds complexity to ensuring your investment is safe. With however the sheer potential in MaidSafe as a transformative platform any amount invested now, albeit in a more risky fashion, could still prove to pay dividends later when the system and more secure native wallet environment exists.
In theory with at least 10 years of development behind it, the launch should not be too far ahead. Their is a risk of course that with everything being open source something more sophisticated could easily be just around the corner. Storj for one is a major advanced competitor for MAIDSAFE and its decentralised storage infrastructure it is part of. Added to this, there will only likely be one or two big winners in the crypto space to dominate all others so MAIDSAFE needs to establish itself soon. If MAIDSAFE can establish its brand in the consciousness of its targeted consumers as a trusted yet easy to use and safe platform, then it could have a first mover advantage in order to get that much needed network affect.
Potential Upside: 100’s %
Justification: Second largest Crypto by far and first mover in smart contract space with evolving and maturing platform becoming more secure.
Ethereum is still the smart contract king and in 2016 it really took the crown of second most popular crypto. Therefore it mainly sits upon high because it has that crucial network effect. Crypto price appreciation is all about community as this brings with it a number of advantages, including security, but it is also all about confidence. Ethereum also had a tough 2016 with its DAO debacle and hard fork but despite splitting many community members to Ethereum Classic it has largely kept its place as a popular crypto. One of Ethereum’s key strengths is that it’s ready to have more applications other than just a currency and store of value. Many applications do run live on Ethereum already but I think we are still some way off them being fully functional and scalable. In fact the Ether token itself is more of an anti-spam mechanism to enable value exchange across applications than a pure investment. However, it remains a decent investment as it crucially does have a known steady inflation rate and limited supply. This is for now at least true, so the currency will appreciate if the platform explodes in popularity when the killer app is finally launched. The development community around Ethereum is, and remains very strong, despite its high profile altercations with community members. There are numerous well funded companies actively developing useful applications that can be better than the current non-crypto more traditional businesses. One big example is the multi million dollar online poker industry which has been marred in controversy and is ripe for disruption. Many companies are developing gambling software on top of Ethereum and it has a great advantage as the software can be proven to be fair. If just one piece of software or application on Ethereum explodes in popularity and goes mainstream then this could draw in a lot of new users, and therefore buyers of Ether, which will result in a large price appreciation.
Another significance to think of how crucial strong software development is in a winning technology platform is to look back at the battle of the computer platforms back in the 90s with Microsoft vs Apple. Back then both platforms were far less compatible and if you wrote a text document in one platform you couldn’t easily share with a user of the other. Therefore there could only really be one big winner so everyone could swap programs and files. Microsoft really won this battle as they had IBM behind their side and all of the top developers and development community, making great software quicker. Ethereum seems to have that same sort of momentum with many announced future and existing ‘useful’ sounding applications readying for launch.
In addition to Ethereum’s development community strength is it’s many deep pocketed investors in the Ethereum tokens and platform. This will ensure it continues to exist for the foreseeable future and will therefore see some significant rise in value, without any serious competition and all things remaining equal.
Risks / Headwinds:
Ethereum has many headwinds which do not only include its most recent troubles, which could also be argued have made it stronger and more secure.
Ethereum is not the finished product as it still needs many more complicated hard forks to scale and become everything it desires. As we have already seen, this van be very dangerous. If Ethereum really does want to move away from the energy intensive proof of work mining you have to convince the existing miners, who profit for their current activities, to make the switch. With Crypto’s success all built on a foundation of good financial incentives to function, this poses a massive challenge they have ahead.
A big threat to Ethereum is of course Ethereum Classic, as it has some large backers and has maintained some interest. In the Ethereum vs Classic investment case, its first easy to see how Ethereum as the winner with all the founders and development community still behind it. That said Ethereum Classic should make it self forward compatible with all of the same open source software in the future so could eventually end up winning with the more righteous and moral high ground. One scenario that could play out is if Ethereum receives a request from authorities for a roll back of their blockchain. Here Ethereum would be likely willing to comply, but this could be a big mistake. Ethereum classic here could pick up the slack and could even overtake Ethereum in such situation.
Another headwind to monitor is the risk of Ethereum’s Smart Contract crown being handed to one of Bitcoin’s future functional side chains. Rootstock is one such side chain that could be a severe threat to Ethereum, not least because it uses the same code infrastucture to deploy smart contracts – Solidity. This means that all of the future Ethereum applications and smart contracts could fairly easily be re-deployed onto Rootstock and a lot of the value on Ethereum’s blockchain could be lost. Ethereum has already shown how fickle the crypto community can be and after all Bitcoin is the overall king. The assumption in this scenario is that side chains prove to actually operate as they intend to do so, but seem to have some way to go before they prove they are as secure as Ethereum.